What does the acronym ESG stand for in sustainability practices?

The acronym ESG stands for Environmental, Social, and Governance. This framework is essential in assessing the sustainability and ethical impact of a company or organization. In the context of sustainability practices, "Environmental" refers to a company's impact on natural ecosystems, resources, and climate change; "Social" concerns the company’s relationships and impact on stakeholders, including employees, customers, and the community; and "Governance" pertains to the company's leadership, ethical behavior, compliance with laws, and transparency.

Understanding ESG is crucial for investors and businesses as it helps to evaluate risks and opportunities related to sustainability in a holistic way, often influencing investment decisions and corporate behaviors. The focus on these three pillars ensures that organizations are not only pursuing profit but are also committed to positive social and environmental outcomes.